September 2009 Archive for Out to Pasture

Chandler Keys is probably right and so is John Phipps when they doubt the wisdom of this reporter’s ruminations.

Keys, the longtime—and much respected for his prowess as a—beef lobbyist described a recent effort with a scatological reference to poultry manure.

Phipps, the host of U.S. Farm Report and among my favorite writers, found fault with the logic of another column a few weeks back.

Keys' complaint dealt with JBS and their plan to buy Pilgrim’s Pride, the fowl outfit. He currently works for JBS and took affront at my doubting whether the Obama administration would allow the deal to go through and my fretting about the loss of another ally in the war of attrition between beef and chicken.

Phipps dealt with an earlier effort, in which I suggested that the National Cattlemen’s Beef Association would be more effective if they required some sort of super majority before taking sides on matters involving intra-industry politics. One of Phipps' points—and he was not alone in his doubts—is that if you wait for total consensus, you risk becoming a do-nothing.

Again, they’re probably right. But...

Keys says my concerns about mixing poultry and beef are unfounded. He says JBS will run the beef, pork and poultry divisions as separate divisions. They’ll have different sales staffs, etc. He cautions against presuming that just because Tyson does something I should assume JBS will do the same.

I’ve no doubts about that. However, I want to remind you that my big concern is losing an ally—an on-the-ground, in the meat case, watchdog—for beef. Regulators make all sorts of rules that impact the competitive positions of the competing meats.

You can pump water into a chicken and sell water at chicken prices. If a processor knows he can sell more pounds of fowl than he buys, he’s going to pay more or charge less and that is a competitive advantage.

The chicken guys could reasonably argue that water tastes better than chicken and is better for you, I presume. Agreed, but I’d still rather see somebody from the beef side up there arguing against it or at least demanding a level playing field.

That’s just one such rule. COOL is harder on beef than on poultry. You’ve got waste regulations that apply differently to the different species. Food safety regulations. Labeling regulations.

Cow people are in competition with fowl people. I want our sales staff to be in competition with their sales staff. I want our packers to be in competition with fowl packers and not just each other. I want them looking for new beef products to sell against poultry's new products, not just their beef competitors.

Keys (and about everybody else I’ve talked to with some savvy about these things) says “pshaw”. (Actually, he said “chicken expletive” but I think that’s just because now that he’s a poultry lobbyist he probably has chicken expletive on the brain. I’ve known him 20 years or more and he used to say bull expletive.) He says anti-trust law isn’t meant to work that way. It’s not meant to limit horizontal integration, and especially not since all they’re doing is more of the same thing Tyson does.

I’ve no doubt he’s correct. He’s been talking to lots of lawyers about the very topic. So I’ll concede he’s correct. I just don’t concede it’s right.

And the reason is that Phipps is also right, and NCBA isn’t about to adopt some super majority requirement just to be a “big tent” organization. As three different guys inside the NCBA loop have told me, “you can’t be all things to all people.”

John, in a blog you can still find by clicking here, argues that if you require a supermajority:

Little ever gets done. Supermajorities are really, really hard to accomplish. If organizations adopt super-majorities they end up pandering to various factions to get those last few votes. See also: Senate, US.

Ignoring issues that are divisive encourages the development of minority opinions. Keep in mind, remaining silent on an issue is in itself a position. Depending on what constitutes a "big enough" minority (30%? 40%?) to remove an issue for the agenda, single issue proponents will diminish the range of subjects the group can address. In other words, the number of issues the group can address will dwindle rapidly, I think.

Without majority rule to enforce going along for the good of the many, there is no reason to ever agree - and I think we have ample history of how close votes in legislatures and courts have created the stable rules for advancing social and economic progress.

Most importantly, I cannot see organization staff members embracing eagerly taking items off the agenda simply because they are divisive. That takes work and jobs from their profession.

I argue with none of those points. But, since he fetched up the Senate, consider how conservatives are going to react if the Senate suspends those supermajority rules to pass a controversial health care bill. They’re going to feel “disenfranchised.”

They can’t drop out of the U.S. and form a health-care R-CALF with a goal in life of looking for points upon which to disagree with the “other side” but if they could...well, ask Rick Perry, the Texas governor who has floated the idea of secession.

The beef industry needs a good, strong organization. That organization needs to be devoted—passionately devoted—to the principles outlined in NCBA’s mission statement summarized on every news release as: working to increase profit opportunities for cattle and beef producers by enhancing the business climate and building consumer demand.

And I would argue that’s a big enough job to require everybody working together—and exclusively—on doing just that. That means a big tent organization with producers and processors on the same team.

Pragmatically it could be we are entering a time for smaller tents - even pup tents with 1-2 in each. The power of the individual has never been greater to affect public policy.

This column is part of the Beef Today Cattle Drive e-newsletter, which is delivered to subscribers biweekly and includes beef industry analysis, market information as well as the latest beef headline news. Click here to subscribe.

To sum it up, he thinks requiring health insurance companies to offer universal coverage, as the president wants to do, will cause them to put their lobbyists to work at ending grain subsidies. So that would be an intended consequence of universal health insurance.

Mr. Pollan may have a jaundiced view of how American politics work, but he has a large and—more importantly, influential—following. They blame post-Depression farm policies for a lot of problems, including fat kids, high health care costs, global warming and poor fishing at the mouth of the Mississippi.

I’m not here to argue one way or the other. It’s just a take I haven’t heard at the coffee shop, and thought you might find of interest.

Don’t they know the Obama Administration’s trust-busters have been sitting there waiting for just such a nice, fat dove to land on the fence wire so they could display their marksmanship to their fellow populists ?

Not that I don’t feel for the Pilgrim’s folks in bankruptcy. I always thought Mr. Pilgrim was a nice guy, even if he is from the fowl industry. He always had time to talk to the little people because he used to be one of us. He used to come and talk to cattle groups about how he ran his business and how cattle folks might emulate some of his successful practices.

And it’s not that I don’t respect the skill with which JBS has pushed its nose into U.S. beef packing. I think a strong international beef company will be good for the country with the best beef in the world. And I certainly appreciate the way they borrowed all that money to keep feeder prices so high so long.

And it’s not that I don’t think corporations like JBS have a right to grow and compete. I know that Tyson’s multi-meat capabilities give them an advantage over competitors who lack their diversified market exposure and can’t offer big retailers a full line of meat case products.

But my gut tells me beef shouldn’t want its sales staff—which is what packers are—to be taking on another, more profitable, line. And year-in, year-out, there’s a bunch more money for processors in poultry than in there is in beef. They own the chickens from the time they’re eggs until they’re cut into pieces and shipped to the highest value market.

And you don’t see many chicken ranchers or chicken processors running around in four-door duallies pulling aluminum horse trailers with living quarters up front. When there is a profit, the integrator gets it. That gives him a lot of incentive to push their own product rather than yours. So if a retailer calls up and says, “Hey we’d like to feature a low-cost product for the holiday,” guess where Tyson’s bottom line flourishes most?

I didn’t like it when the last administration stood by while Tyson bought IBP. If you want my prime explanation, it’s that before that merger, Tyson management was pushing to force USDA to disallow all that water pumped into poultry. In those days, Tyson rightly saw that poultry’s outsized sway in Washington had provided that industry with a flock of competitive advantages. And Tyson—CEO Bob Peterson, to be exact—was fully aware that beef and poultry were competitors. And he was for beef. And he was putting his lobbying efforts into getting some of the discrepancies corrected.

But after the merger, we heard no more of that. Few people were as reviled by the protectionists of the beef industry as was Bob Peterson, but until Tyson came along, he was a beef promoter.

Let me be the first of my acquaintances to ever say this, even though it’s not easy: fu fufu foo…fufufoorrt… fortunately, we have Obama in office this time around. His Department of Justice and USDA give every indication they’d like nothing better than to bust some corporate somebody for something. And—double points!—these guys are foreigners, to boot. Lou Dobbs is going to love this.

So, what can JBS be thinking? I mean, the Obamistas are already planning to have joint USDA-DOJ hearings—or should we call them “town hall meetings”—on agricultural concentration next spring. They are itching for a fight. What part of “walking into the enemy camp with an unloaded gun” do the JBS folks not understand?

This column is part of the Beef Today Cattle Drive e-newsletter, which is delivered to subscribers biweekly and includes beef industry analysis, market information as well as the latest beef headline news. Click here to subscribe.

Oops. It turns out that somebody mistook my meaning in a recent blog now posted here.

You’ll note that a reader who signs as “pwoggi” says:

"Surely you wouldn't call someone a Goober just because he called you a lackey!"

That’s my fault, that erroneous reading. I was talking about Alan Guebert, who is a widely read agricultural columnist and, by the way, a darned good, if a bit predictable, writer. A “goober,” according to the Urban Dictionary online, is "just a kindhearted, rather oblivious goofball. It's [a] term of endearment, really. It comes from the ancient Scottish verb `to goub,' which has to do with doing a dance and smiling sheepishly while doing so, exposing the goubs in one's teeth."

That’s a problem with the written vs. spoken word. Had I been reading the piece aloud, the accent on the second syllable would have made clear that Guebert with the silent “t” sounds kind of French and not at all gooberesque.

So I’m sorry about the misconception. I’m not one to call people names. That would be childish.